COMMENT: Head in the Sand

There’s a war going on in the second biggest LatAm economy, but no one in its capital seems particularly bothered.

It’s easy to
shoot the messenger – the press does sometimes
exaggerate to make a point – but Mexico may well be
worse than many bankers and investors can stand.

Even if you believe the
battle is confined to drug dealers and their competitors, it is
hard to dispute the numbers. More than 35,000 Mexicans have
died in drug-related violence since December 2006, almost half
killed just last year. On a per capita basis, that is
equivalent to almost 100,000 US citizens dying in the last four
years.

The negative data are not
all body count. According to Banorte, drug-related violence
lops 1%-2% off the country’s potential annual GDP
expansion rate, versus a projected 4%-5% this year.